Thursday, July 14, 2011

Summer Branding

Levi Chandler ropes while Chris Dalley brands a calf last week on the summer range near Star Valley, Nevada. (Kimmel Dalley photo)

Cattle Market looks Bullish

Washington—A just-released United State Department of Agriculture report has ranchers rejoicing.

“Yes, everyone’s happy as long as we can keep the input prices down,” said Wyatt Prescott of the Idaho Cattle Association.

Cattle prices are up while supply is down. But the best part of the report says that consumer demand remains steady despite high prices.

According to the USDA retail prices have surged because of the diminishing cattle supply and skyrocketing feed costs. The report shows that 11% fewer cattle have moved from the range to feedlots this spring. The smaller number of "feeders" reflects fewer calves, smaller herds as ranchers tighten their operations because of skyrocketing corn prices.

“Especially in the feeding segment, added Prescott. “The cost of grain is astronomical along with high feed prices and specifically high corn prices. It’s a challenge for feeders to break even with the current input costs. I’m talking about the price of fuel, our ranchers are struggling with $4-dollar plus diesel prices and they could go up again in the fall.”

Overall, the USDA says meat prices are running 12% higher than a year ago, that’s up from their March 25 forecast for a 4.5% to 5.5% increase. Pork prices, which gained more than other meats last year, will be a half-percentage point higher, rising 6.5% to 7.5% over 2010.

The USDA says its food-at-home inflation forecast is unchanged from the March report which calls for grocery-store prices to run 3.5% to 4.5% more than a year ago.

Kevin Penner of Ag Trader Talk in Des Moines says they started seeing strong market prices before the 4th of July rush and prices have stayed strong, surprising market analysts who worried those high prices and a shaky economy could scare off grocery store consumers, but so far that hasn’t happened.

According to the USDA, a “thrifty” family of four spent an average of $612.70 on food prepared at home, according to the U.S. Department of Agriculture. That’s an increase of 4.6 percent over last year.

But the “thrifty” family’s monthly grocery bill pales compared to the $1,209.20 spent last month by families on a “liberal” budget, the USDA says. That’s an increase of 4.4 percent from 2010.

And the USDA says households will continue to pay more for groceries this year —because of rising energy and agricultural prices and increased demand for food around the world.

Idaho is capitalizing on the trend, exporting more beef than previous years while demand continues out-pace supply.

“Our exports are up and we’re up 60 percent from a year ago. Those are huge numbers and right now we have a competitive advantage, we have the best beef in the world and with the economic status of the dollar, its relatively low, American beef is a good buy on the world market,” said Prescott and adds that thanks to great feed in the State of Idaho and good moisture, Ranchers can expect to see a greatest herd retention rate in at least a decade.

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